The consumers price index (CPI) rose 0.1 percent in the December 2013 quarter, Statistics New Zealand said today. Higher international air fares and rising housing and dairy prices were partly countered by lower vegetable prices and cheaper petrol.

International air fares rose 12 percent in the December 2013 quarter – the highest quarterly rise since the December 2009 quarter. “International air fares usually rise in December quarters. This quarter’s rise reflects seasonally higher air fares to Asia and Europe,” prices manager Chris Pike said. Package holiday prices (up 7.3 percent) also showed a seasonal rise.

Prices for housing and household utilities (up 0.5 percent) also rose, reflecting higher prices for property maintenance, purchase of newly built houses, and rentals for housing.

Annual inflation is 1.6%which is higher than I like it (I believe in aiming for 1%) but under the midpoint of the 1% to 3% range.

I prefer to look at the long-term series. Here are some comparisons of average annual price increases over the last five years (Dec 08 to Dec 13) compared to the previous five years (Dec 03 to Dec 08).

Electricity 3.9% compared to 7.8%

Household Energy 3.6% compared to 10.0%

Food 1.7% compared to 3.4%

Fruit & Vegetables 0.6% compared to 6.4%

Rental Housing 1.9% compared to 3.6%

Home Ownership 2.9% compared to 8.0%

Labour are very good at claiming they will lower food prices, electricity prices and housing costs – but their track record speaks for itself. Last election they campaigned to remove GST on fruit and vegetables. Well under the last five years of Labour they increased by 32%, and under five years of National just 3%.

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This entry was posted on Tuesday, January 21st, 2014 at 2:00 pm and is filed under NZ Politics.
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It’s a powerful point about food prices, labour would reduce them by at most 15%, in the process hugely complicating gst, but overall prices would still go up another 17% based on their track record! vs a 3% raise and no handout for accountants and bureaucrats under national.
It’s damn annoying the only people to win from removing gst from food would not even be the proposed targets, it’s a foolishness only trumped by the working for families debacle.

The points missed that this quarter normally has much lower inflation, in fact a drop was forecast so this signals that the quarters where inflation is usually highest will be very high this year. I see interest rate moves coming very soon, i see a lot of Aucklanders about to panic, hahahaha im cashed up and ready for the mortgagee sales

It’s an interesting topic;aiming for inflation targets and the attendant monetary and fiscal policies.

People who accept governments targeting inflation through monetary policy are implicitly accepting government authority over the value of their assets. An uncomfortable place to be if one argues for the government butting out of personal affairs and financial control.

Realising this is the logical path that leads many people to Libertarianism and really ought to make those people who cannot countenance that squirm a little bit about why they can’t follow the logic – they ought think a bit about where it is exactly the logic fails.

Can anyone anyone at all other than a banker put up a good case for interest rate hikes based on those figures.
Imagine for a tiny moment what affect increased air fares have on the average household who really can’t afford to go oversea’s anyway. Contrast that with the destruction and stress caused by raising the interest rates on their mortgages.
As long as arseholes point towards the ground I’ll never understand the fallacy of inflation and interest rates.
Like all comodities money cost is normally decided by supply and demand.(ie when some govt/bank mechanism doesn’t artifically interfere with the market.)
The world supply of money is dominated by two trades. Oil and gold. Currently oil is slowly going down in price and will during the course of this year probably reach $60.00 per barrell. Thus there is a lot of capital freed up for other purpose. Gold follows oil until it reaches a point where it becomes uneconomic to mine. Its been falling for sometime and will continue doing so until oil reaches its low.
Thus there is plenty of cash available and with the NZ dollar like it is the banks are buying cheap and ramping up their margins. Add our huge surge in exports and we have a huge surpus of cash flo coming across the border.
Time for the banks, Reserve and all to swallow their dead rats and bring their product into line with many other countries.
Plenty with iinterest rates in the 3-4% or lower.

Can anyone anyone at all other than a banker put up a good case for interest rate hikes based on those figures.

The theory is the Reserve Bank has sufficient information and skill to determine future trends in inflation so ought act ahead of it’s occurrence to forestall it rather than wait until it occurs and then lag it in controlling monetary policy. If successful they maintain predictable conditions for business to prosper.

If unsuccessful they may stifle ambitions and plans of investors and borrowers.

Distaste for this prognostication and it’s influence is what I mentioned is the logical lure to Libertarianism and specie currency for many.